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Success in solar could scorch supply-side dynamics

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Recycling has been a dominant force in the liquid crystal display (LCD) industry for years. As the largest consumer of indium, the majority of the metal for LCD consumption is derived via recycling rather than virgin material.

But signs are pointing to a supply crunch on the horizon—in part due to expectations of increasing demand for indium from the solar market—as current recycling techniques approach their limits, driving research into new, alternative recycling methods.

Around 1,318 tons of indium are expected to be derived from recycling this year alone vs. only 450 tons of virgin supply, according to Cranston, R.I.-based alloyer AIM Specialty Materials USA. Recycling is necessary to ensure the constant flow of the versatile metal and to help stabilize prices.

As a zinc byproduct, indium can be subject to shortfalls if zinc mines, particularly in China, are closed. One large indium producer has identified a nearly 100-ton reduction in indium supply, much of it attributable to the closure of unprofitable indium processing plants, although there has been no impact on prices, given weaker demand for end-consumer products. In general, very few refineries focus solely on indium and "no one puts a hole in the ground to get indium," said Brian O'Neill, sales manager at AIM Specialty.

The industry responded to rising indium prices a few years ago by expanding its scrap recycling capabilities to meet increasing demand. As a crucial step in the LCD manufacturing process, recycling of indium tin oxide (ITO) waste from the sputtering process has received the majority of attention. Most recycling from the sputtering process is done in Asia, where the major ITO manufacturers are based.

However, this vital engine of indium generation is inevitably approaching a point of maturity, currently estimated to be operating at more than 90-percent efficiency, according to one indium producer.

No one is sure whether major indium-consuming countries like Japan have significantly run down their large scrap stocks. Historically, there had been no incentive to develop recycling facilities, as it had been cheaper to buy raw indium. "It just didn't pay to recycle," O'Neill said. "They didn't throw it away; they stockpiled it." These large scrap stockpiles were built up prior to the last indium price spike to $1,200 per kilogram in 2005 from $60 previously, according to AIM Specialty.

Since then, ITO makers have started to recycle their stockpiles, making it the largest component of indium supply. "The million-dollar question is, when does the stockpile get whittled down? That's what no one knows," O'Neill said.

Alex Iasnikov, business development manager at Peterborough, Ontario-based recycler Recapture Metals Ltd., said he thinks Japan's recycling capacity is now in balance with demand and the stockpiles are no longer substantial. "I don't know if the stockpile is real or not," he said.

As current recycling methods reach their limits along with the possibility that indium stockpiles have been depleted, the search for alternative indium recycling routes has taken various directions.

One alternative is to retrieve indium by recycling end-of-life products like solar-cell panels and LCDs themselves. However, "logistical, technical and economic challenges still need to be overcome," said Christian Hagelüken, senior manager of business development and marketing at Umicore Precious Metals Refining.

Umicore is already recovering indium from smelter byproducts, as well as small LCD electronic devices, primarily cell phones, at its Hoboken refinery near Antwerp, Belgium. However, the cell phone collection rate has been very low, with the majority ending up in sub-standard treatment processes, Hagelüken said. Furthermore, the economics of recycling small LCD electronic devices are currently driven by the gold and palladium content rather than indium.

Similar problems plague the recycling of larger LCD flat panels. "I think it makes sense to recycle flat panels only if you do full-scale recycling and try to get more material than just indium," Iasnikov said. Indium currently makes up less than 2 percent of the overall LCD material cost, and the price would have to rise significantly before a profound impact would be felt by LCD manufacturers.

Indium prices are expected to rise to $800 to $1,000 per kg. by the end of 2009 as indium production falls and ITO producers run down accumulated stocks, around three times the free-market price listed by AMM earlier this year.

While the impact of the recession likely will reduce demand for sales of key LCD products in the near term, producers agree that the softness will be short-lived as LCDs play a vital role in many popular electronics devices, including touch-screen handheld devices like the Apple iPhone. Still, indium prices aren't expected to reach anywhere near the level necessary to make end-of-life LCD recycling a near-term reality.

In the solar semiconductor space, Recapture Metals is one of the few known recyclers to have figured out how to extract indium from residual copper, indium, gallium, (di)selenide (CIGS) material used for solar cell manufacturing. Although CIGS solar cells contain only 1.5 microns of these metals, CIGS can account for 30 to 40 percent of the material cost and indium 40 to 45 percent of the cost.

However, CIGS solar semiconductors face fierce competition from the silicon wafers that currently dominate the market and if indium prices rise, solar cell manufacturers might simply shift production to focus on silicon wafers, which don't use indium.

Recapture Metals is capable of processing about 25 tons of CIGS annually. It estimates that industrywide between 2 and 5 tons of indium is being generated annually through CIGS recycling, most of it from its plants. Recycled CIGS is currently limited by the small number of commercial CIGS solar panel operations and the minimal level of CIGS scrap generated.

If the solar CIGS industry continues to grow, the amount of recycled indium derived from this source could rise to 20 to 40 tons annually in coming years, Iasnikov said, depending on how quickly the economy recovers and the technology improves. At the moment, though, investors are holding back on financing additional capacity as previous growth estimates for the CIGS industry failed to materialize.

Recapture Metals estimates it would take about $1 million to $2 million for an existing recycler to beef up CIGS recycling capacity and $3 million to $5 million to build operations from scratch.

Another possible method of indium recycling involves separating the material from zinc leach residue. Such residue is left unprocessed because it's not economical to treat at current prices. For zinc producers, installing such a system could cost up to $50 million to comply with strict environmental regulations, so indium prices would need to be sustained at much higher levels to justify the investment.

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